ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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importing
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specialization
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balance of trade
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absolute advantage
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Detailed explanation-1: -Specialization refers to the tendency of countries to specialize in certain products which they trade for other goods, rather than producing all consumption goods on their own. Countries produce a surplus of the product in which they specialize and trade it for a different surplus good of another country.
Detailed explanation-2: -It is correct because when countries furnish a trading relationship with each other, it increases the level of output of countries. The importing country obtains goods at a low price than their production cost, and the exporting country increases its efficiency to produce enough to export to other countries.
Detailed explanation-3: -Q. What would be one consequence of a prolonged decline in the value of the euro relative to the U.S. dollar? European exports to the United States would become less expensive.